Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267644 
Year of Publication: 
2019
Citation: 
[Journal:] Journal of Industrial Engineering International [ISSN:] 2251-712X [Volume:] 15 [Issue:] 4 [Publisher:] Springer [Place:] Heidelberg [Year:] 2019 [Pages:] 545-556
Publisher: 
Springer, Heidelberg
Abstract: 
Certain inventory items are living organisms, for example livestock, and are therefore capable of growing during the replenishment cycle. These items often serve as various saleable food items downstream in supply chains. The purpose of this paper is to develop a lot sizing model for growing items if the supplier of the items offers incremental quantity discounts. A mathematical model is derived to determine the optimal inventory policy which minimises the total inventory cost in both the owned and rented facilities. A solution procedure for solving the model is developed and illustrated through a numerical example. Sensitivity analysis is performed to demonstrate the response of the order quantity and total costs to some key input parameters. Incremental quantity discounts result in reduced purchasing costs; however, ordering very large quantities has downsides as well. The biggest downsides include the increased holding costs, the risks of running out of storage capacity and item deterioration since the cycle time increases if larger quantities are purchased. Owing to the importance of growing items in the food supply chains, the model presented in this article can be used by procurement and inventory mangers when making purchasing decisions.
Subjects: 
Inventory management
Economic order quantity
Growing items
Lot sizing
Incremental quantity discounts
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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